Nick Eberstadt’s post invites comments on the relative nature of US power. I’ve contributed a few thoughts there, but would also like to build on a question raised by Desmond Lachman in his Forum comment last week. Where does this turmoil leave globalization?

Even before the financial crisis, globalization faced a long list of challenges.
-The American political system appears to be allergic to further tariff-cutting efforts. A likely shift to the Democrats in the next Congress may not help matters, though there is a counter-argument that says Democrats elected in Republican-leaning districts may be more open to trade liberalization.
-Soveriegn wealth funds and post 9/11 fears have created a drift toward investment protectionism, as documented in a recent Council on Foreign Relations report by David Marchik and Matthew Slaughter.
-Climate negotiations are likely to create a fight over green tariffs, with potential to trigger more protectionism.
-The food price spike earlier this year triggered a widespread loss of faith in global markets as providers of food security. Several countries lunged for an autarkic response by imposing export controls, and the Doha Round stalled largely because China joined India in the view that protecting domestic farmers is vital.
-Rising prices for other commodities in the past several years has produced a scramble to lock up supplies. Rather than believe that they can secure needed raw materials by buying them on world markets, China and others have taken the view that they need to buy mines, oil wells, and so on. Resource nationalism has emerged as a challenge to the liberal international order.

Against this difficult background, the world now faces a painful recession that will be blamed, with some justification, on globalized capital markets. Already, the policy response has involved more assertion of control by national governments and less faith in international markets. In some cases, the expansion of the role of the state has been unavoidable: The US government had no choice but to take-over Bear, AIG and Fannie and Freddie. In other cases, the state has flexed its muscles too much: The Irish elimination by fiat of all bank credit risk and the bans on short selling of stocks fall into this category.

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Wealth may be absolute, but economic power and influence are relative–which begs the question of how America’s would-be rivals can be expected to fare in the years and decades ahead.

Focusing on US vulnerabilities without going through the same exercise for existing or emerging great powers will clearly leave us with an incomplete, not to say distorted, assessment. (This was the underlying problem with, for example, Paul Kennedy’s famously flawed but best-selling analysis of US “imperial overstretch” 20 years ago.)

We can discuss the details in further back-and-forth–but for now let me just signal the perhaps obvious fact that Russia, China and India all have *huge* economic vulnerabilities of their own–vulnerabilities that could significantly slow or even derail their current ambitious growth objectives.

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